Powerful forces of change are conspiring around the pharmaceutical industry
While the last two decades have constantly challenged the sector to evolve, the current economic, political and health technology environment accentuates and accelerates the call to action. From healthcare reform to patient empowerment and the near-extinction of the blockbuster, pharma companies have little choice but to adapt their approach to market to address the myriad elements that together form a new landscape.
But the established commercial model needs more than just evolution. Fundamental change is required. Many aspects of traditional strategy are no longer proving effective. The whole health system is reaching a critical juncture as policy makers and payers demand decisive action on cost, and new models of provision emerge that reward outcomes, not merely treatment. The traditional model of pharmaceutical selling by demonstrating brand efficacy to prescribers is challenged by provider consolidation, centralised decision-making, payer influence and patient information.
The customer is changing and suddenly the patient is at the centre of the value equation. Recognising the moving landscape, providers – the traditional pharmaceutical ‘customers’ - are adapting their models to prioritise service and care outcomes. How decisions are made and who is making those decisions have moved on. Pharmaceutical companies have to follow.
At PA Consulting Group, we believe that the future commercial model of successful pharmaceutical companies must have at its heart the development of genuine partnerships with healthcare providers, payers and other key groups that prioritise quality patient outcomes.
This means moving on from a volume-based, benefits-selling, blockbuster mindset to forge effective relationships with decision makers. Pharmaceutical companies must leverage their rich and diverse resources to collaborate on the pressing issue of tomorrow – how to keep a growing patient population well – prioritising lower costs of care and preventative medicine.
There are foundations to build on – the established pharmaceutical commercial model is in some areas already heading in this direction. Some oncology products in Europe, for example, are priced and reimbursed on outcomes. During commercial evaluation of a product in early stage development, companies prioritise candidates with label claims that show additional therapeutic or safety benefits over best-in class – otherwise payer reimbursement is compromised. Most companies are actively developing account management approaches. Many, including GSK, Pfizer and Johnson & Johnson are reviewing their go-to-market model in key markets, especially the US.
Those that do not start to address the challenge now risk being overtaken by adaptive and more patient and customer-centered competitors. The smart players recognise that the changes ahead are not an all-or-nothing decision. Local and country markets will evolve at different rates and some customers within them will remain diverse in their outlook for some time. This means creating a flexible commercial model that can embrace and adapt to change, while retaining the best of what pharmaceutical companies do today where it remains relevant.
How can this be done? We believe it means adopting three key principles:
Outcome-based solutions demand an integrated approach
Under pay-for-service or shared-savings reimbursement models, pharmaceutical companies will increasingly be rewarded based on patient outcomes. This moves the focus from treatment based on indication to proven results for individual patients, removing the incentive for companies to market to volume and increasing the incentive to take part in preventive care.
This means two things – working closely with providers on new solutions for specific patient populations and critical care groups and accessing patients who are not engaged by the right regimens – a historically difficult proposition. But pharmaceutical companies can play a role based on accumulated knowledge about specific disease states, data and patient behaviors. Working with providers on such issues as population healthcare can provide a win-win-win situation: Patients receive more appropriate care, providers and payers reduce treatment costs, and pharmaceutical products play a central role in delivering the outcome.
This was the case for one group of US workers who were identified as high risk by their employer due to lifestyle choices and predication for Diabetes and COPD. By working with a dedicated team from one pharmaceutical company on a program of education, treatment and lifestyle change, all parties achieved a positive outcome. For the pharma supplier, this win was an increase in prescribed volume.
To achieve this model, previously independent parties must work together, including payers, providers, patients and suppliers. Pharmaceutical companies should partner with healthcare organisations to reach the end-customer – the patient – more effectively, improve efficiency and reduce costs.
Customers are changing faster than reform – the pharmaceutical sector needs to move quickly and win trust
Providers have seen elements of the reform agenda before. This time though, the response is real and sustainable. We see accelerating consolidation of health systems in the US and formation of new prescribing and reimbursement groups in Europe. In both cases, reality is moving more quickly than policy demands. A key driver is the empowerment of patients and decision makers by the spread of data, emergence of personal health records and growth of value networks which allow more informed decisions and confidence in an outcome-based approach.
If pharmaceutical companies are to forge effective relationships with other key healthcare stakeholders, they need to be much more than a supplier and really understand the needs and expectations of their customer groups. They must partner with organisations that are addressing the major issues of cost, outcome and care, and become a more integral part of the health ecosystem. Pharmaceutical companies can then evolve ways to make the most of their products and services, and help develop solutions, not just sell products.
Structured Account Management complements traditional and emerging channels
To build these relationships, disciplined and effective account management will be central to the new model. However, before every sales manager rushes to a consultative approach it is important to remember that pharmaceutical sales representatives will still be a key piece of the effort. Sales representatives remain an important route to providing efficacy information and companies can build on this channel to provide additional valuable knowledge – such as around the HIT
(Health Information Technology) or the reform agenda. There is great potential for integrated reps and account leads to serve as a support and education network for organised Medical Group and Health System customers. And of course, where traditional ‘prescriber’ customers remain the key decision makers, the representative model has a long future ahead.
Ultimately, what both organised customers and independent practitioners want is a balanced and integrated approach from pharmaceutical partners that reflects their needs – this may require a greater emphasis on the digital provision of information for some and a more personal approach for others. Informed patients help providers and pharmaceutical companies alike, therefore appropriate digital provision of key product information and compliant therapy education are important components of the model. The industry is already well aware that change has arrived.
However, we think actions speak louder than words. First, the time is now to start addressing the demands that the challenges outlined place on the industry. Second, this must be done in a holistic manner. Many programs look at individual parts of the model described here – for example, account management, new incentive structures or patient outcome – but do so in silos.
PA advocates doing this differently: achieving genuine partnerships and a shared focus on the patient with providers and payers means broad-based, holistic and accelerated evolution of the commercial model. This means developing the quality of customer (prescriber, provider, patient and payer) insights; value propositions; customer-facing roles and responsibilities; performance management; channels; training; and the systems and processes that support the model in an integrated effort.
As one leader told their sales team: evolve or choose extinction.
Authors: Matthew Smith and James Allen, PA Consulting Group